The past two years have been a rollercoaster on hardwood market all over Europe. Prices were raising enormously especially for oak and according to my opinion without any particular reason. Yes, there was inflation and increased demand on oak, but raising the prices for almost 100% on some dimensions was simply too much.
We, producers of different wooden products, had to follow the market and raise the prices accordingly to raw material prices. But there is much more behind that only oak prices.
With the upcoming crisis it is showing once again that wooden sector is the first that has to face diminished inquiry on the market. It is logical – priority for lower and middle class of population in crisis are essential goods as food and energy.
According to German data already 80% of furniture stores feel lower inquiry for their products.
WHAT ARE THE BIGGEST CHALLENGES FOR WOOD INDUSTRY IN 2023
- HIGHER WAGES
Due to historically low rate of unemployment, the employees had opportunity to negotiate for higher wages. It is understandable and logic. Prices for basic goods like food, gas, real-estate were skyrocketing and people simply could not survive anymore.
We must understand that workers in productions are on the edge of poverty, some of them already fell under this edge.
The states are regulating wages with minimum wage, which will at least in Slovenia get significantly higher with January 2023. Our government is planning at least 12-15%.
That will of course have a significant impact on prices of wooden products in 2023.
Unfortunately wood industry is among the industries with lowest wages.
- LACK OF WORKFORCE
There is less and less workforce available on the labour market. Western EU countries, especially Germany spent the last 20 years relying on cheap labour force from Eastern Europe countries, who joined EU during this period.
But this pool of working force is drained. It is not only a huge problem for developed countries, but also for the Eastern European countries, like Balkans, Poland, Hungary, Czech and Slovak Republic,…
When I travel to Croatia, I can see empty villages, where only old people live. Young people are all gone abroad searching for better future. Similar situation is occurring in Serbia and Bosnia and Herzegovina.
More and more factories are searching production workers in far East countries like India and Thailand.
Try to find a skilled plumber or electrician – there are none. And the few ones that are left, can increase their prices on the market, because there is simply no competition.
Restaurants are closing in the center of Ljubljana due to lack of waiters and waitresses.
Simply everything is going wrong.
- ENERGY COSTS
Well, this is another challenge productions have to face at the moment. We simply cannot blame only Russian invasion on Ukraine for energy problems.
For example let us check electricity costs. Production price for electricity produced in our only nuclear power plant is still about 50-60 €/mWh. Why are the prices on the market currently at least 10x more expensive? Why do the countries allow electricity distributors to sell electricity for such high prices?
In Austria they intend to tax extra profits from electricity distributors, but this does not help industry and ordinary consumers to get the fair price. We still have to pay these ridiculous prices on the market.
I agree EU has to stand against Russian aggression on Ukraine. Anyway at the moment it seems, that all the sanctions against Russia are hurting mostly EU citizens, who are paying insanely high prices for gas and electricity.
We came to the point where we are threatened to experience long electricity reductions this winter. Slovenia is already studying simulations of electricity blackouts during this winter.
Do you realize what it means if productions remain without electricity in wintertime for a few days and outside is -15C?
For my production it is a disaster. We can have enormous damage on raw material, drying chambers and production flow, that is why we bought a generator to at least keep the temperature in the production above freezing.
CONCLUSION
Oak prices and also prices of other hardwood species are calming down. I expect that the prices will not raise significantly in 2023. On the other hand energy costs and lack of labour force will do the damage on wooden products.
We still don’t know how much will electricity cost us in 2023 and shall we at all have enough labour force to produce, however I remain optimistic and hope for the best.
All wooden chain – from forest owners to furniture stores will have to cooperate together and offer the market products, that people will be willing to purchase.
